"The Ministry would like to refer the news report published in certain section of media on 19th June, 2013 wherein certain allegations have been made by the Hon'ble Member of Parliament, Shri Gurudas Dasgupta against the Minister of Petroleum and Natural Gas of extending favours to Reliance Industries Ltd. (RIL)," it said.

Media reports alleged MoPNG is stalling arbitration proceedings against RIL seeking to recover a penalty of USD 1 Billion from the firm for violating contractual obligations in gas extraction in the Krishna-Godavari basin.

"It was RIL which opted for arbitration after a USD 1 Billion penalty was imposed on them on the advice of the Solicitor General. But after Jaipal Reddy's departure from the Ministry, every effort is being made to condone the criminality and no effort has been made to recover the penalty," said reports.

"The above allegation has no factual basis. No decision regarding this pending arbitration proceeding was ever sought from the present Minister. A perusal of the relevant file reveals that the file has not been dealt with by anyone in this Ministry after 17th December, 2012," it said.

The MoPNG said RIL served the notice of arbitration on 23 November, 2011 itself that is much before the notice for denial of cost recovery (not the penalty) due to loss of production issued on 2 May, 2012.

"Thereafter, on the basis of opinion of the Solicitor General of India, the Ministry with the approval of the then Hon'ble Minister for Petroleum and Natural Gas, Shri Jaipal Reddy decided to join the arbitration proceedings by appointing the Government Arbitrator in June, 2012. Therefore, it was decided before the joining of the present Minister that the recovery cannot be made pending arbitration proceedings," it said.

Some media reports also said new penalty has not been imposed for the failure of RIL to not only live up to the promised production but also for not doing enough to complete the works programme submitted by it despite reminders by the DGH.

"It is reiterated that no penalty was imposed earlier and it was only denial of certain cost recovery element due to loss of production which is pending in the arbitration proceedings for the years 2010-11 and 2011-12.

"No decision has been sought either by the Ministry or the DGH from the present Minister for issuance of such notices for the further period. Thereafter, appropriate decision will be taken as and when such proposal is placed before the Hon'ble Minister," said the ministry.

The ministry also reacted to the news that DGH has recommended that 86% area of the K.G. Basin Block of RIL D6 should be surrendered by the contractor.

"The CAG has also made similar remarks. However, the present Minister has not only sought to defy the CAG recommendations but is also talking about going against the report of DGH on the issue. However, effort is being made to sabotage the arbitration process and officials are being pressurized to write a note on the uselessness of such proceedings," said reports.

The ministry said: "On examination of the CAG report, DGH had made certain recommendations (not which is being referred here) for relinquishment of certain area by RIL which was processed by the Ministry and placed before the Minister for decision. Before a decision could be given, the file was withdrawn by the Secretary for re-examination of certain fresh facts/recommendations made by the DGH.

"The file is yet to be resubmitted before the Minister and, therefore, question of defying CAG recommendation or going against the recommendation of DGH does not arise. As regards to sabotaging the arbitration process and pressurizing the officials to write a note, it is based on figment of imagination and, therefore, no comments could be offered."

As per another allegation, RIL has already recovered USD 5.5 billion investment made by it in the KG D6 block and it is the Government that stands to lose USD 1 billion by not proceeding with the arbitration.

"As already stated earlier, the Government decided to join the arbitration proceedings, a decision that was taken before the present Minister took over this Ministry," said the ministry.

"In view of the above, it is clearly evident that these allegations are baseless and malicious and the Hon'ble Member seems to be getting swayed by some vested interests in order to stall the decision making process in the Ministry and derail a serious attempt to bring back Petroleum Sector towards the path of performance and efficiency," it said.

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